Category Archives: Economics

The infrastructure in the United States is deteriorating at an accelerated pace. Water-mains are bursting, bridges are crumbling, tunnels are caving-in, roads are in disrepair, and the number of accidents and resulting economic waste in this country is completely unacceptable. With weather volatility evidenced in the past couple years, it is not out of the question that our infrastructure will continue to be tested well beyond its limits, and fail in some cases.

An analogy could be made by comparing the economy to a human body. The circulation of materials and resources (blood cells, dissolved nutrients, etc.) can be seen as the economy’s circulation – and if there’s a clot (natural disaster) in a vital region (let’s say NYC) the global economy could grind to a halt.`So, clogged arteries are like ports and other transport hubs across the globe, if they cannot parley resources efficiently and fluidly. Quantitative easing could be like a blood-thinner, being designed to make it easier for us to take out loans from banks, thus increasing economic activity and liquidity in the market. I could go on for days explaining how each body part can be compared to a component of the global economy, but I think you get the picture – infrastructure is important, and its degradation over the years should not go underfunded and overlooked.

If we are to try to close the trade deficit in this country like what Obama has been pushing, we must be able to accommodate higher trade volumes if we are to maintain our current “American” lifestyles.

I think we should physically connect the crap out of this country. The best way to facilitate business would be through universally integrated and expedited shipping processes. If we connect ourselves like Europe, with high-speed commuter trains zig-zagging the continent. The US is blessed with a myriad of freshwater river systems. If we are able to invest in more canals, most notably for land-locked developing cities like Atlanta, Research Triangle Park, Charlotte, and Richmond (among others, those are just the ones I could think of off the top of my head), we will be able to maintain and nurture a second major economic boom in America’s history (the Post-WWII period being the “ideal” economic period in America’s history). What made that time special was the average citizen’s mentality – it exemplified togetherness with mass sales of war bonds, funding the government that was keeping the economy afloat, and resurrected it from the Great Depression in the 30s.

Port designs will have to improve: many are not able to accommodate the large Post-Panamax tankers and ships. The ports along much of the east coast, west coast, and Mississippi cannot meet the needs of the increasingly global aspect of our economy. Port expansion, dredging, and other techniques can do this, but they require a lot of time and economic resources; an innovation in the construction industry to facilitate this process will be needed if the government will continue to be unwilling to spend exorbitant amounts in infrastructure investments [investments because of the positive economic impact they create].

The railway system will need to be expanded and integrated with established commuter hubs. This should start on the East Coast first, connecting the world’s largest megalopolis together – From Boston to Atlanta. Other possible capillary bed train transport corridors could be from San Diego to Seattle on the West Coast and from NYC to Minneapolis in the Midwest. Other parts of the country are not densely populated enough to be viable candidates for an economically rational commuter rail infrastructure investment.

This will also reduce the strain on the airline industry in the US, which may decrease airlines’ impact on aggregate income, but I believe this loss in income will be more than made up for via jobs from construction, public and industrial transportation services, and other sectors significantly tied to the railway industry.

Also, a goal is to get as many trucks and heavier vehicles off the roads as possible to preserve the integrity of our infrastructure. Imagine being able to move all of your house’s contents across the country via train. It won’t make any wrong turns, won’t have to stop to sleep eat or pee, it will show up on time, and it can be delivered locally – all done by rail. The rail service is also the cheapest, safest, and most carbon-sensitive land-based transport method. Taking the burden off the roads is one giant step toward helping our infrastructure last while also decreasing maintenance costs. Imagine all of the time, resources, and lives needlessly wasted from driving motor vehicles since there is a safer, smarter alternative – that’s one huge incurred opportunity cost!

We will also need to change the type of building material we use in construction. There are advanced building materials coming out that are beginning to use nanotechnology – for example, water-repellant concrete can keep cracks and potholes from forming (especially in the northern half of the United States) [see here]. In addition, we should find ways to make our concrete brighter and more reflective – driving at night is an inherent hazard, but using more reflective concrete will also help reflect more energy back into space (especially for major highways and parking lots) [see here].

Also, traffic patterns should change. It is proven that using circles instead of traffic signals helps facilitate the flow of traffic through intersections. The constant flow of cars around the circle allows for a large percentage of the people trying to pass through the intersection to become active members of the process. The economic impact from fewer decelerative and accelerative forces that can shear the integrity of a car’s engine and brake pads, less time wasted waiting in queue to use the intersection, and fewer pedestrian casualties can be tremendous. Also, I will assert in a later post that we must switch over to a purely electric car system if we are smart enough to strategically position ourselves for when the Peak Oil phenomenon reaches the masses (we hit global peak oil production in 2005, and peak US oil in the 70s – 2011 is actually the highest on record, but it is most likely to service emerging market growth and facilitated by better oil withdrawal techniques).

This time series, based on satellite data, shows the annual Arctic sea ice minimum since 1979. The September 2010 extent was the third lowest in the satellite record. (Photo credit: Wikipedia)

With the Green Revolution gaining steam as we come out of this large recession, there are many entrepreneurial ideas out there that can have a great impact on our fight against global climate change acceleration; I say climate change acceleration because our additional carbon emission (on top of Earth’s natural CO2 emission via volcanoes, forest fires, permafrost/glacier/ice cap melting, etc.) into the atmosphere has caused a reciprocal acceleration in the global warming process. As evidenced recently, we are experiencing more extreme weather, and are well overdue for a global climate change. The movie, The Day After Tomorrow, got it somewhat right with their themes of inclement weather and radical climate change – however, this process should not happen nearly as fast fast as the film represented, as the Earth – in case you haven’t noticed – is blessed to be a very resilient planet. This is largely due to its huge water surface cover and a relatively (to most other rocky planets sans Venus) thick atmosphere.

The water on this planet acts as a sort of buffer to the volatility of the earth’s climate. It absorbs carbon dioxide and many other gases from the atmosphere in small concentrations, but large aggregate quantities. We must do our best to minimize our impact on the Earth’s water. This would involve cutting chemical/trash dumping into water resources, conserving/recycling fresh/reused water, and enhance our water retention/redirection infrastructure.

See extending Description below (Photo credit: Wikipedia)

The Earth’s “thick” atmosphere is also what allows life to thrive on this planet. The atmosphere has dissolved countless meteors that could have threatened the integrity of the planet’s climate (Dinosaur extinction is evidence of what happens when a big one gets through). In addition, since the atmosphere is a gaseous solution, it also acts as a buffer – it’s interaction with life and macro tectonic happenings on the planet helps keep it in equilibrium. If the atmosphere or water on this planet reach a certain critical point where the acceleration of climate change is irreversible, we’d be screwed.

It is a fact that the earth has climate fluctuations – the most recent one that we have proof of is the Little Ice Age that lasted from the 15th-19th centuries. However, humankind’s carbon emission has tipped the scales in the opposite direction, creating a warming greenhouse effect. The increased carbon release from the permafrost/glacier/ice cap melting has also accelerated global carbon emission. These phenomena will have macroclimate impacts – macroclimates are dictated by the conglomeration of microclimates, and since microclimates are heavily reliant on the amount of moisture they receive, and the amount of change in macroclimates is heavily correlated to the y/y change in moisture received on the micro scale. With proof of changing sea temperatures, ocean currents, jet streams, and ice cover, one can infer that weather patterns will be heavily influenced. The weather, via amounts of snow, rain, wind, or humidity, will considerably change in the next century, no question.

This weather volatilisation phenomenon has been experienced recently. The considerable increase in the number of tornadoes we’ve seen in the past two years is unprecedented in amount and season. In addition, an increase in the amount of deforestation and naturally-covered ground in general increases the amount of energy absorbed by the earth’s surface, increasing it’s average temperature. It is almost impossible to predict the future climate by region, but there are sure to be some major changes that humans must, and will, adapt to – because that is what we are the best in the world at.

These adaptations will be in the form of inventions and other entrepreneurial ventures to minimize our carbon and water impact. Explanations of my utopian world will be outlined in the next couple of blog posts.

I will be talking about these few things in my next couple blog posts:

Found this while going through this blog www.thefuturesagency.com They help outline emerging and future business trends and their group “is structured as a virtual organization with global reach, deep knowledge and domain expertise, and extensive experience as strategic advisors.”

Okay, so this past semester I took a course, ECON 423 – Financial Markets, with Professor Michael Aguilar. His class really taught me the in’s and out’s of all that is stocks, bonds, what-have-you… He loved to talk for days about real-world applications of his economic theory, so it was only fitting that he had us compete against each other in a virtual stock exchange game. My team finished somewhere in the middle of the pack (partly because we didn’t check our portfolio over spring break – and the markets just so happened to nose-dive), but I learned a great deal about the trading process. I’ve created my own game, where I start out with $1,000,000 at $9.95/trade just this past week, and so far I’ve done pretty well. In just four days of trading, I’m up almost 3%, while only trading ETFs (Exchange-traded funds); these funds are comprised of many different stocks and are usually separated by sectors (financials, basic materials… etc.). Since ETFs are conglomerates of individual companies, they are much less volatile than the any single ticker in the ETF. I’d highly recommend doing this for practice, so that when you’ve got real money to throw around, you’ll actually know what to do with it.

Prof. Aguilar is a big believer in top-down economics, meaning that macro events (such as the Fed changing interest rates, or any trade agreements, etc.) have predictable trickle-down effects in equity and fixed income markets. This is sort of the opposite view of daily traders, who pounce upon micro events (like new products coming out, whatever) as quickly as possible in order to ride the wave of a single company’s stock. I feel like my professor is mostly correct. I say mostly, only because I feel that some sizable companies, like Apple, have substantial impacts on the market as a whole.

So, for the major macroeconomic events this week… In order to combat rising oil prices in these summer months and family road trips for the 4th of July, Obama released 30 million barrels from the strategic oil reserve earlier this week. This was a “smart” move in the sense that it will be popular among the people, but 30 million barrels is just about 2-days worth of oil for Americans. So, for the trades… I had originally held IEZ – an oil equipment ETF which is positively correlated with the price of oil – and once the announcement came out, I immediately sold it and shorted the position, as oil prices fell (At least this is what I intended to do, but in the virtual stock exchange interface, you have to “sell to cover” instead of just selling the same amount of units that you bought – I sure won’t make that mistake again). I then shorted IEZ for two days or so – until I felt the stock bottomed out; I then bought to cover, and reaped the benefits as the price went back up considerably.

In case you didn’t know, the S&P 500 is promising to show its largest weekly gain in a long time. This is partly due to Greece agreeing upon a $38 bln austerity plan that paved the way for the country to get its vital bailout loans. This eased concerns of Greece’s government defaulting, which wouldn’t be good news for anyone. So, I was very bullish all week on the ticker IVV, which is the S&P 500 ETF, since the market had previously dipped on the concerns. I was right. I also made plays on Japan’s ETF, EWJ, and an emerging maket ETF, EEM, by going long on both positions. I did this for the same reason – Greece’s austerity plan.

Misses: I could have made a fortune off of the news that came out just yesterday that the Fed raised the debit swipe fee limit from 12 cents to 21 cents. Immediately after the news came out, Visa, AmEx, and Mastercard all jumped considerably. However, once people realized that the credit card companies were lobbying for something near 34 cents/swipe, shares quickly fell back to a stable price. I wouldn’t consider this that bad of a miss, simply because the timing of the trade would be nearly impossible with the virtual stock exchange, which is delayed 20 minutes.

Now, since I’m going on vacation to Greece [WHAT WHAAT!] next week, I’m going to sell all of my positions so that I won’t get screwed in case the market crashes.